Summary - State aid to the industry 2009

This report shows the extent of state aid given to the Swedish industry in 2009. Both the WTO and the EU have special regulations that limit the scope of national aid and impose demands on openness and on-going reporting of the aid granted. In Sweden state aid is used not only within the industrial policy but also within other policy areas.

The total state aid to the industrial and service sector was 56.3 billion SEK in 2009 which represented an increase by about 27.6 billion or 95.2 percent. The financial and economic crisis led to this unexpected end of a period of low levels of state aid. In 2009 state aid had thus doubled compared to the year 2008 and the level increased to 2 percent of GDP. Crisis measures to the real economy for the temporary framework started to be implemented in Sweden in 2009 .

However when we exclude the crisis measures, state aid has declined for two consecutive years. A similar trend occurred in the period 2004-2006. During the year 2009 the state aid to industry and services has indeed decreased compared to the previous year. State aid stood at 27,6 billion SEK representing a decrease of 1,2 billion SEK or 4,2 percent. The greater part of state aid reduction in 2009 (excluding the crisis measures) is explained by the decrease of the tax expenditures related to the use of energy, the aid to the labour market and regional aid which all combined represented a decrease by 6,8 percent. The aid value for this above mentioned group went down from 24.9 billion to 23,2 billion SEK.

Tax exemption for environmental purposes had a value of 17.8 billion SEK in the year of 2009 with a decrease of 7.9 percent. In spite of the fall this aid scheme represented almost two thirds of the total aid granted to the industrial sector, excluding the crisis measures. Aid to the energy sector remained unchanged at 3 billion SEK in 2009. This pattern was due to unchanged energy aid in the form of excise duty reduction in favour of carbon dioxide neutral fuels, a reduction of aid in wind power (41,3 percent). However aid to R&D in the energy sector showed a considerable upsurge (205,5 percent).

Among the aid categories other than tax expenditures related to the use of energy, there was a downward trend in aid levels to R&D which fell by 20 percent in 2009 (FoU figures should be interpreted with caution due to unreported aid as well as the fact that they are preliminary). State aid to SME which decreased in 2008 rose in 2009 by 283 percent. It should be noted that the change is from a relatively low level. Aid to other enterprises and sector specific aid went up this year by 2 percent. A large share of this policy measure is carried out via tax reduction directed to shipping business. Regional aid decreased by 10 percent in 2009 and keeping a share of 5 percent in relation to the total aid. Aid to economic development and regional transports are important components of the total regional aid.

Employment aid had diminished from 610 million to 570 million SEK, equivalent to a decrease by 6,6 percent in the year 2009. Start-up grants to unemployed amounted to 286 million SEK which represents a decrease by 9,8 percent (317 in the year 2008). The aid category miscellaneous showed an increase by 53 percent to a value of 1.7 billion SEK. This is mainly explained by an increase in the aid to the National Board of Housing, Building and Planning, for smaller rented dwellings and student accommodation from the amount of 0,655 to 1,35 billion SEK between 2008 and 2009. However the other aid categories within the group miscellaneous have diminished during this period with the exception of aid to the banking sector in the context of the economic crisis.

These results show that Sweden are in line with the recommendation to "further their efforts to … reduce the general level of State aid, shifting the emphasis from ad hoc aid or supporting individual companies or sectors towards tackling horizontal objectives of Community interest, such as employment, regional development, environment and training or research".

Some selected facts for 2009 compared to revised figures of 2008:

State aid as a percentage of GDP in current prices decreased between the years 2008 and 2009 and it went from 0.91 to 0,89 percent excluding the crisis measures. The level of the State aid to industry and service sector, including the crisis measures, rose during 2009 from 0,91 to 1,81 percent in relation to GDP. These exceptional crisis measures also led to an abrupt increase of the total level of aid in the EC27 member States to more than 2 percent of GDP.

The largest aid program apart from the tax expenditures related to the use of energy, was energy aid reaching a value of 2.97 billion SEK in 2009 (2.99 billion the previous year).

Energy aid in the form of excise duty reduction in favour of carbon dioxide neutral fuels amounted to a large part or 2,04 billion SEK, which is the same amount as previous year. This aid policy supports producers and importers of bio fuels (bio ethanol and bio gas).

Individual Recruitment Incentive, which is under the administration of the National Labour Market Board, amounted to 570 million SEK, with a reduction of 6,6 percent compared to the year 2008 (610 million).

Start-up grants to unemployed decreased by 9,8 percent and amounted to 286 million SEK (317 million year 2008). This aid is also administered by the National Labour Market Board. Start-up grants during 2007 were almost reduced by half compared to 2006 and the year 2008 start-up aid also diminished by 30 percent compared to the year 2007.

Regional transport aid, within the regional aid policy amounted to 369 million SEK in 2009 (565 million SEK in the year 2008). This change meant a decrease of this state aid programme compared with the previous year (35 percent).